The Regulation on Real Estate Trade ("Regulation"), which sets forth and regulates the procedures and the principles with respect to the real estate trade, and which is based on Article 16(1)—b of the Law on Retail Trade No. 6585 ("Law"), has been published in the Official Gazette on June 5, 2018.
The Regulation defines the scope of real estate trade as follows: (i) all activities relating to the purchase and sale of real estate, (ii) agency and brokerage services relating to the marketing and rental of real estate, and (iii) consultancy and management services relating to real estate, regardless of whether or not such real estate is registered to the land registry (i.e., listed in the book of real estate registers).
As per Article 5 of the Regulation, real estate trade can be carried out by merchants, tradesmen and craftsmen who receive a license (also known as a "certificate of authority") through the Real Estate Information System ("Information System"), which must be obtained on behalf of the real estate enterprise from the provincial directorate of its place of business. A license is granted exclusively for each individual business and cannot be transferred or assigned to another business. In case there are multiple merchants, tradesmen or craftsmen who are engaged in the real estate trade within a single enterprise, then only a single license will be granted to that enterprise, rather than furnishing a separate license to each person engaged in the real estate trade. A license is valid for five (5) years. Enterprises should affix their licenses in an easily visible location in their workplaces.
In order to receive the real estate license, enterprises must (i) meet the requirements set forth under Article 12 of the Regulation, which stipulates and regulates the essential physical properties of the enterprises, (ii) be registered with the relevant trade association, and (iii) be an individual income or corporate taxpayer. If the enterprise consists of real person merchants, tradesmen or craftsmen, such person must (i) be at least 18 years old, (ii) be a high school graduate, (iii) not have declared bankruptcy, and (iv) not have been convicted of or sentenced for certain crimes set forth under the Regulation. Furthermore, these rules also apply to the representatives and authorized agents of a company or legal entity that is engaged in the real estate trade, as well as the branch managers of any local offices or branches of such entities.
Moreover, all such persons must also attain and possess a "professional proficiency certificate", which is based on the national qualification standards for authorized real estate consultants (Level 5).
The Regulation lists the services that are subject to the real estate trade regulations as follows:
- Marketing activities or agency and brokerage services concerning the purchase and sale or rental of real estate, whether such real estate is registered to the land registry or not,
- Examination, research and reporting services regarding the real estate that is subject to the purchase and sale or rental activities,
- Providing information to the client with respect to the market purchase and sale or rental value of the real estate,
- Facilitating or assisting in title deed transactions,
- Executing agreements with the buyers or the lessees, following up with rental payments and utility subscription procedures, ensuring that services such as the repair, maintenance and restoration of the real estate are provided, and informing the client regarding the procedures and developments with respect to these issues,
- Providing consultancy and management services regarding the real estate,
- Carrying out other services related to the real estate trade.
Services related to the real estate trade must be provided on the basis of a written authorization agreement, which will be signed between the client and the real estate trade enterprise. At a minimum, such agreements must include the components that are enumerated under Article 15 of the Regulation. As per Article 18 of the Regulation, the real estate trade enterprise may cooperate with one or more other enterprises in providing real estate services, provided that such cooperation is included and declared in the authorization agreement signed by the enterprise and the client. Following the purchase and sale brokerage services provided by the enterprise, a real estate brokerage agreement for the purchase/sale must be signed between the buyer, the seller and the enterprise. Likewise, following the rental brokerage services provided by the enterprise, an agency/brokerage agreement regarding the real estate rental must be signed between the lessee, the lessor and the enterprise. The minimum components that must be included in such agency/brokerage agreements are listed separately in Articles 16 and 17 of the Regulation. Services for showing or displaying a piece of real estate, for whose purchase/sale or rental the enterprise is providing brokerage services, can be carried out by issuing a separate "real estate display certificate" for each real estate that is shown or displayed to potential buyers or lessees. The minimum components that must be included in such real estate display certificates are listed in Article 19 of the Regulation.
The service fee rate for real estate purchase/ sale transactions cannot exceed 4% of the sale price, excluding VAT. Service fees for rental transactions cannot exceed one month's rental fee, excluding VAT, for rental agency/ brokerage services.
The enterprise qualifies for and becomes entitled to the service fee following the registration of the purchase/sale of the real estate in the land registry, or at the conclusion (i.e., signing) of the rental agreement between the client and the lessee.
For all other real estate service agreements (i.e., excluding purchases/sales and rentals), the enterprise will receive the service fee after the conclusion of such agreement. The service fee will be equally allocated between the client and the buyer or the lessee, unless otherwise stipulated in a written agreement.
As per Article 22 of the Regulation, in case of a breach of the provisions of the Regulation, an administrative monetary fine in the amount of TL 3,000 (for failing to submit commercial books, documents, and other records or related information), or in the amount of TL 2,000 (for hindering or impeding the duties of the audit personnel), will be imposed on the violators. Additionally, in case of recurrence, such fines will be multiplied.
This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in December 2018. A link to the full Legal Insight Quarterly may be found here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.